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Stock market to watch 3Q earnings reports

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By James A. Loyola

Cautious local investors will be looking at third quarter earnings reports for cues on how to trade the market this week.

However, Regina Capital Development Corporation Managing Director Luis Limlingan noted that, “Resistance is heavy at 8,000, market will probably still be making adjustments post FTSE rebalancing.”

But, Limlingan added that, “Specific issues may move depending on whether their earnings are released.”

BDO Chief Market Strategist Jonathan Ravelas said market players have been betting that with the lower inflation and interest rates, margin recoveries are more evident this time than in the second quarter of 2019.

He expects that, last week’s close at 7,885.23 continues to highlight the market to consolidate within the 7,700 to 8,000 levels in the near-term.

“Expect the bounce to stretch towards the 7,900 to 8,000 levels in the near term. Failure to try the 8,000 level could cause some profit taking and retest the 7,700 level,” he warned.

Among the early third quarter disclosures were filed by banks include Bank of the Philippine Islands and Union Bank of the Philippines and COL Financial is recommending buy for both stocks.

“We continue to like BPI because it is poised to take advantage of the country’s healthy economic growth on the back of its strong and highly liquid balance sheet as well as its large branch network,” the online brokerage firm said.

For Unionbank, COL Financial said it has upgraded its outlook “as the upside to our fair value estimate remains significant.”

“Going forward, we expect the strong growth in the bank’s credit cards, mortgage, and commercial loans, coupled with declining funding cost, to drive the growth in the bank’s lending income,” it added.

Meanwhile, Abacus Securities Corporation still like Pepsi-Cola Products Philippines Inc. because it expects the firm’s recovery to have continued in the third quarter due to falling costs of sugar and PET containers.

It also likes First Philippine Holdings Corporation as it remains cheap based on the market value of its subsidiaries.

Given the value of its stakes in Meralco and Rockwell Land, Abacus said FPHC’s market prices translates to a valuation of only P4.86 per share for its controlling stake in First Gen Corporation, a huge discount to its last traded price of P25.00 per share.

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